This is a stunning plunge in lending to entrepreneurs and small businesses — the twin engines of job creation. “Credit markets once provided $300 billion to $550 billion net new credit per quarter to the nonfinancial private sector,” Malpass recently observed. “This helped fund new investment, inventories and other working capital needs. ... Private-sector credit increased only a net $66 billion in the third quarter of 2012.”
Why should banks risk capital on innovative new companies with brilliant ideas when Washington dutifully repays interest and principle on those boring old savings bonds — albeit with freshly printed cash?
And what happens when Uncle Sam devours most of the smorgasbord?
Unemployment reaches 7.9 percent, while the economy contracts 0.1 percent in the fourth quarter of 2012. Rather than hire people and expand operations, business managers bite their nails and fret that paying off the debt will unleash a stampede of new taxes.
Touchingly oblivious to all of this, House Democratic leader Nancy Pelosi of California recently told “Fox News Sunday”: “It is almost a false argument to say we have a spending problem.”
If only Washington had a spending problem; it has a spending addiction. Congress and the White House should go cold turkey and terminate antiquated and destructive programs and agencies (e.g., depart the housing sector). From environmentally mundane Western acreage to empty office buildings, federal assets should be privatized. Social Security and Medicare beneficiaries should face affluence tests. Also, the eligibility age of 65 to 67 should acknowledge that life expectancy is not 62 (as in 1935, when Social Security began) nor 70 (as in 1965, when Medicare commenced). Americans now typically stick around for 79 years.
With all due affection for the children and grandchildren, they eventually will feel the wrath of Obama’s (so far) 55.5 percent national debt hike. Meanwhile, trillion-dollar annual deficits, rampant borrowing and the $16.5 trillion national debt are punishing American individuals, families and businesses today.
Deroy Murdock is a Fox News contributor and a media fellow with Stanford University’s Hoover Institution on War, Revolution and Peace. Email Deroy.Murdock@gmail.com.